CATL Updates
2/ Last week, CATL's 1H earnings were a big beat. CATL's earnings also provide us some better insights into other battery manufacturers and the battery side of the EV and storage business that we rarely get to see.
— Taylor Ogan (@TaylorOgan) August 30, 20224/ Raw material costs for batteries have increased in the last year, resulting in *some* battery manufacturers passing *some* of those cost increases onto *some* of their customers. https://t.co/MDCgepoWxy
— Taylor Ogan (@TaylorOgan) August 30, 20226/ For "EV battery system" and "Li-ion materials", this led to some GPM recovery on the quarter, but lower on the half. For "Other revenue", which contributed 26% of the company's overall gross profit (an ATH), GPM reached 75%. pic.twitter.com/v8Q5ixaEwU
— Taylor Ogan (@TaylorOgan) August 30, 20228/ Expect price increases to continue into 2H22, especially for ESS, as high as 20%-25%, but the majority of that coming in Q4 due to the slow(er) pace of ESS customers/projects. Overall, we expect GPM to recover in Q3, and grow further in Q4.
— Taylor Ogan (@TaylorOgan) August 30, 202210/ Calculated ASP for battery cells continued to rise in 1H, to $123USD/kWh. It's difficult to estimate where this will trend into Q3 and beyond, which management said, "...will be determined by raw material prices." pic.twitter.com/xogUqUXo8c
— Taylor Ogan (@TaylorOgan) August 30, 202212/ Despite effective capacity continuing to increase, combined installed capacity + capacity under construction was flattish on the half. It appears the focus in 1H was turning on capacity at its Yichun, Fuding, and Cheliwan factories, rather than building net-new capacity. pic.twitter.com/sEQjwQRCSG
— Taylor Ogan (@TaylorOgan) August 30, 202214/ When asked why equipment investment per GWh (a figure more battery companies should break out) decreased to RMB 160 million/GWh, management said efficiency of equipment increased, and there was no slowdown of equipment procurement.
— Taylor Ogan (@TaylorOgan) August 30, 202216/ An interesting response on the call to a question about battery recycling emphasized the importance ("conflict") of the ownership of the battery. If battery recycling becomes profitable and strategic for battery companies (so far unknown), expect BaaS & battery swapping to⬆️.
— Taylor Ogan (@TaylorOgan) August 30, 2022Follow @snowbullcapital Follow @TaylorOgan17/ There are no signs of slowing for CATL, despite headwinds. It will be important to watch as it sets the tone and pace for the EV industry, and as it expands further into ESS, which will be the most important space to watch in the coming years.
— Taylor Ogan (@TaylorOgan) August 30, 2022
